The Kenai Peninsula Tourism Marketing Council, a non-departmental entity of the Kenai Peninsula Borough, has not complied with the terms of its contract. Until the council comes into compliance, borough Mayor Dave Carey said he will withhold a $300,000 grant.

The marketing group appears to be on track to provide the necessary information that will allow it to receive the grant in the upcoming fiscal year, but the matter represents the kind of housekeeping error that Carey has said he wants to eliminate under his administration.

The grant contract specifies that the marketing council must submit annual financial audits to demonstrate to the borough that it is properly and effectively using borough funding.

The marketing council, which is a nonprofit organization, has submitted an audit for 2006, but it does not have any audits on file for 2007 or 2008. Shanon Hamrick, the marketing council's executive director, provided a schedule to the borough in which she specifies the marketing council will submit the 2007 audit by Feb. 26 and the 2008 audit by April 28.

Carey informed the marketing council about its missing reports following last year's budget discussions. Since then, the non-departmental has had some trouble getting the reports together.

A company called Mikunda, Cottrell & Co. conducted the 2006 audit. Following that audit, the previous mayoral administration never pressed the marketing council to file additional reports, according to Hamrick.

Such a decision is actually addressed in the nonprofit's grant contract.

"The failure of the borough at any time to enforce a provision of this agreement shall in no way constitute a waiver of the provisions nor in any way affect the validity of this agreement," the contract states.

When Carey's office discovered that the organization was missing reports, the administration pressed the marketing council.

Hamrick said her council is happy to comply and has cooperated with the requests.

"We conduct ourselves aboveboard in everything that we do, and to find out that there's something wrong was upsetting," Hamrick said.

However, Mikunda, Cottrell & Co. gave the council something of a headache.

"The local office of Mikunda, Cottrell was nonresponsive to our repeated requests to provide us with our completed audit from 2006, as well as scheduling time to complete subsequent years," Hamrick told the borough in an Aug. 18, 2009, e-mail.

Since then, the marketing council struck a partnership with a company called Lambe, Tuter & Wagner to complete the audits and the marketing council is optimistic about finishing the reports.

"I am confident that the remaining audits will be completed on schedule," Hamrick told the borough in a Dec. 15, 2009, e-mail. "Our experience with Lambe, Tuter & Wagner has been one of professionalism and dedication to their clients."

Carey said it is not his intention to withhold funding. He just wants to make sure that the necessary reports are filed.

"As soon as we have the paperwork, we'll expedite giving them the $300,000," Carey said.

"It's a requirement of the contract. Either you've met the requirements or you haven't."

The marketing council is in compliance with every aspect of its grant contract other than the financial audits. The 2006 audit revealed the marketing council operated in "conformity with accounting principles generally accepted in the United States of America."

The marketing council depends on the borough for approximately 40 percent of its funding and uses the money to promote tourism on the Kenai Peninsula. Without that funding, Hamrick said the council would be ineffective.

"It would be absolutely devastating to tourism on the Kenai Peninsula. We're in direct competition with places all over the state that have much bigger tourism marketing budgets than us," Hamrick said.